Gold prices rose more than 1% on Thursday as investors digested the US Federal Reserve’s interest-rate increase and signals of further monetary tightening, while the recent rally in oil prices came to a halt.
By 0149 GMT, spot gold was up 1.1% at $4,310.49 an ounce, after hitting its lowest level in nearly six weeks on Wednesday.
US gold futures for December delivery fell about 1% to $4,348.70 an ounce.
Oil prices declined, extending losses from the previous session after reports that Saudi Arabia was offering additional crude shipments through Oman, easing concerns over potential supply disruptions.
“Oil prices remain a key factor to watch. If oil prices continue to decline, that could support higher gold prices, at least from a medium-term perspective. Until that happens, I expect gold to remain range-bound,” said Kelvin Wong, senior market analyst at OANDA.
He added that the current rise in gold prices was also largely driven by technical factors as markets assessed the Federal Reserve’s signals pointing toward further monetary tightening.
Although gold is traditionally viewed as a hedge against inflation, higher interest rates tend to reduce its appeal compared with assets that generate returns.
The Federal Reserve raised interest rates on Wednesday and signaled the possibility of further increases in the coming months. New Fed Chair Kevin Warsh joined the unanimous decision, which effectively acknowledged that the Trump administration has so far been unable to bring inflation under control, with policymakers concerned that price pressures could worsen.
The Bank of England is widely expected to leave interest rates unchanged on Thursday, although investors are watching for any indication that rising energy prices could push the central bank toward a tighter policy stance similar to that of the Federal Reserve.
In the Middle East, Saudi warplanes carried out strikes in Yemen, according to statements by the Houthis, as the Iran-aligned group strengthened its gains following a rapid advance.
Other Precious Metals
Among other precious metals, spot silver rose 1.4% to $63.83 an ounce, while platinum gained 1.6% to $1,780.55 and palladium jumped 2% to $1,295 an ounce.
Source: Reuters
